Economy 'stalling' as services firms suffer cruel April

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Fears grew today that the UK is grinding to a halt ahead of the Brexit vote as data revealed that the economy barely grew last month.

April saw the weakest growth in ­services for three years, signalling a mere 0.1% rise for the overall economy, according to the purchasing managers’ index from Markit/Cips.

That is massively down on the 0.4% growth seen in the first three months of the year.

“The slowdown in the service sector follows similar weakness in manufacturing and construction to make a ­triple whammy of disappointing news on the health of the economy at the start of the second quarter,” said Chris Williamson, chief economist at Markit. “Some of the slowdown may be ­attributable to the early timing of Easter, though April also saw an increase in the number of companies reporting that uncertainty about the European Union referendum caused customers to hold back on ­purchases.”

The index fell from 53.7 to 52.3 in April, the lowest since February 2013. Any reading above 50 indicates growth, but such a rapid slowdown indicates very little improvement.

David Noble, chief executive officer at the Chartered Institute of Procurement & Supply, said: “The looming EU referendum has had a profound effect on the sector, keeping prices relatively stagnant and delaying new orders.”

The survey also showed that the National Living Wage, which came into force last month, had pushed input prices up by the most since January 2014.

The Bank of England recently said the referendum was weighing on confidence and investment, and the impact could be more sever if the vote results in the UK leaving the EU.

Credit rating agency Moody’s today said UK banks would face higher costs in the event of a Leave vote, but that it would have little effect on the $285 ­billion (£200 billion) money market fund management industry in this country.